Friday, May 29, 2009



The rules on MPs expenses are contained in a 72 page publication, “The Green Book: A guide to Member’s allowances”. You can find this on the web, This contains some fascinating information that I thought I would share with readers.

The current edition of the Green Book was published in March 2009. The Forward tells us that the new edition “is the result of decisions taken by the House over the last year”. I am fascinated by “over the last year” which I take to mean on several different occasions. While the rest of us have been worrying about the recession, international terrorism, Afghanistan and Iraq and the situation in the Middle East and Sri Lanki, MPs have apparently turned again and again to worrying about their expenses!

The first Chapter is headed “Welcome”. It tells us that “MPs are provided with financial support in the form of allowances to enable them to work effectively in Parliament and in their constituencies”. It appears that “work effectively” in the minds of many MPs requires them to be relieved of all financial worries that beset the ordinary man. “Welcome” section does go on to explain that this relates to “costs properly incurred in the performance of their duties”, but perhaps MPs are too busy to have read that far. “Welcome” also tells us that “Members who are contemplating incurring an expense which is large or unusual, or who are uncertain about any allowance, should contact the Department [of Resources] beforehand for advice”. I see from Saturday’s paper that Tom Dalyell did that two months before he retired and the Department told him that £18,000 for three bookcases in which to keep his archives was a bit OTT but £7,800 would satisfy the test of being “properly incurred in the performance of” his duties as an MP. Lucky for Tom that he needed to ask the Department not HMRC. HMRC would have said that no part of the £18,000 was incurred “in the performance of the duties”, whether properly or otherwise. As I mentioned in my previous blog, Andrew Walker, the man in charge of the Fees Office is reported to have said that, “he had virtually no ability to scrutinise [MP’s] claims beyond a “common sense” test”. Personally I cannot see how even a common sense test could have produced £7,800 or, indeed, any figure other than nil.

In passing, I see that Andrew Walker said that, “responsibility for policing expenses lay with voters, they could eject an MP from Parliament if he or she had been exploiting the system”. My understanding is that even if I mobilise all of the voters of Brent North we cannot eject our MP from Parliament. Once we have voted him in we are stuck with him until such time as Her Majesty chooses (on the advice of the Prime Minister) to dissolve Parliament. But even if I am wrong, how can I and my fellow constituents carry out our responsibility for policing? Although my MP sends me a newsletter every so often, he does not include in it the amount of expenses that he has claimed. The last figure I can find on the HMRC website is a total figure for 2007/08, 14 months ago. It took the Sunday Telegraph four years to obtain the release of details of MPs expenses under the Freedom of Information Act and they only got it because the sponsor of a private member’s bill to block the release of the information (widely supported in the Commons) could not find a sponsor for the bill in the House of Lords.

So I have to leave policing to the Fees Office. Sadly, “Welcome” tells me not that the Fees Office cannot disallow expenses. Rather it “is expected to bring to the attention of individual Members instances where they may appear to be vulnerable to criticism or accusations of impropriety”. They don’t seem to have done a very good job there, then. If an MP does not recognise his vulnerability, the Fees Office can refer the matter to the Members Estimate Committee of the House of Commons.

The House has adopted a Code of Conduct which, readers will be pleased to know, “includes a number of general principles of personal conduct. These are based on concepts of selflessness, integrity, objectivity, accountability, openness, honesty and leadership”. Yes, seriously, even after all of the exposures in the last couple of weeks that is what “Welcome” actually says! It also gives a useful tip to MPs, “How comfortable do I feel with the knowledge that my claim will be available to the public under Freedom of Information”. Tom Dalyell apparently feels very comfortable but a number of others seem to have not noticed this tip, as now that the information has become available they do not seem that comfortable.

I do not wish to dwell on chapter 2, “The Allowances” as others have done so fairly extensively. I did however notice para, “Subsistence: A flat-rate sum of £25 may be claimed for any night which a Member spends away from his or her main home on parliamentary business”. I noticed it because HMRC have recently issued “benchmark scale rates” for subsistence that HMRC will accept from all employers (or, apparently, all employers other than Parliament which has its own, far more generous limits). These are £5 for breakfast – but only if the employee leaves home before 6.00am and actually buys a breakfast away from home and does not regularly leave home before 6.00am – and £15 for an evening meal – but only where the employee has to work later than usual, finishes work after 8.00pm having worked his normal day and actually buys a meal (or the £15 can provide both lunch and dinner if the worker is away from home for at least 10 hours). Presumably the House of Commons canteen overcharges MP’s; they surely do not simply think that they deserve to eat better than “the little people”?

An MP can also claim for the provision of an office (in addition to the one that Parliament provides for him at Westminster that is). This includes “additional costs of using part of your home as an office … but you must take particular care to ensure that you do not claim twice for the same expense”. So that’s all right then!

The MP also gets an allowance for staff. He is told though to “ensure their staff are … able and (if necessary) qualified to do the job, and actually doing the job”. I would hope so too. Curiously the Green Book contains no special rules about employing your spouse or children or ensuring that they are not paid above a market rate.

On travel, I note that, “Examples of appropriate expenditure” includes “routine travel … by the recognised direct route between Westminster, your constituency and your main home as well as travel within the constituency”. For the rest of us, home to work travel is of course private expenditure for which we cannot claim a tax deduction. Spouses and civil partners and children under 18 of MPs are each entitled to up to 30 single journeys each year between London and the constituency or the Member’s main home. For the rest of us, of course, the number of such journeys that attract tax relief is nil.

I’ve got a radical suggestion. Parliament ought to be a good employer. It should provide the maximum benefits that qualify for tax relief for the ordinary man in the street. There should be no extra tax privileges for MPs as compared with anyone else whose job has two bases. I think it would be reasonable for Parliament to revisit the tax rules that apply to such people. I do not think that the current rules are reasonable and if MPs have to fix rules that apply to everyone, including themselves, they should be given the opportunity to consider whether they might want to be less harsh than they decided to be when they fixed the rules to apply only to “the little people”.

That would make HMRC the guardian of MP’s expense allowances. They can do a far better job of this than either voters or, on the basis of the past, the Fees Office. Voters would see that MPs are both not in a privileged position and not in charge of vetting their own expenses. Such an independent scrutiny should overcome the current public suspicion of MPs’ expenses. Any revised system that either leaves Parliament in charge of vetting its own expenses or takes MPs expenses out of the ambit of public scrutiny cannot restore people’s faith in the integrity of their MPs. The knowledge that MPs were answerable to HMRC would surely do so!

Robert Maas

Friday, May 22, 2009



What annoys me most about the scandal of MP’s allowances is the hypocrisy. “How can I be criticised, I have kept within the rules?” Fair enough! Or is it? MPs are not the only people who keep within the letter of the rules but use them in a way that could not have been intended, in order to rip off the taxpaying public. Mr Brown and a succession of Treasury Minister constantly describe such action by other people as “unacceptable tax avoidance”. How can it be unacceptable to Mr Brown for you and I to keep within the letter, rather than the spirit of the rules, but so acceptable for his friends to do so that he rewards them with government jobs?

I heard an even more astounding “justification” from an MP on the radio recently. Successive governments have given MPs such minor pay rises that they exploit the expenses rules to bring their earnings up to what they believe to be a more appropriate level. That is not keeping within the rules, it is abusing the rules. I do not know what the appropriate level of pay for an MP is, principally because I am unclear what the average MP does. £61,820 – roughly two and a half times average wage – does not seem particularly low to me. Logically the right pay for a job is the amount that will attract a small number of properly qualified applicants so that there is a choice in who to appoint. Vacancies for MPs generally seem to attract several hundred applicants, which suggests, if anything, that £61,820 is wildly excessive.

What does an MP do to earn his money? Those who have watched Parliamentary TV will know that only between 2½ and 5% seem to take part in, or even listen to, most debates. Of course they have to be at Westminster because when a vote is called most of them turn up and vote in ignorance of the arguments and, I suspect, in ignorance even of what they are voting for (or against). Voting simply involves walking through the door that their whip points them to. I have attended several Parliamentary Committee hearings. The impression that I get is that it is fairly unusual for all of the members of a Committee to be present throughout its hearings. I am told that an important part of the job is dealing with constituent’s problems. Over the years I have written to my MP perhaps half a dozen times. On each occasion my letter has been forwarded to the appropriate Minister and the Minister’s dismissive response sent back to me with a compliment slip. Accordingly none of the people who have been my MP seems to have regarded dealing with my problems as even warranting their getting personally involved. Being an MP seems to me an unskilled job with not very onerous responsibilities. No wonder there are so many applicants anxious to do the job for £61,820.

But back to hypocrisy. MPs are office-holders. Such people are taxed in the same way as employees. I set out later what that is. Office-holders in general, I mean, of course, not MPs. Because in 1984 the then Chancellor, Nigel Lawson, decided to exempt from tax completely the “overnight expenses allowances” of MPs. Overnight expense allowance is defined as “an allowance expressed to be in respect of additional expenses necessarily incurred by the Member in staying overnight away from the Member’s only or main residence, for the purpose of performing parliamentary duties (a) in the London area or (b) in the Member’s constituency” (s 292, ITEPA 2003).

There are some interesting points here. The first is “necessarily incurred”. That is a well interpreted phrase in tax law. It means an expense that would have to be incurred by each and every holder of the office, even one who lives next door to the Houses of Parliament. The second is “overnight expense”. This does not have its normal day-to-day meaning. It has been defined by parliament to mean “rent or mortgage interest, hotel expenses, utilities and communications charges, furnishings, maintenance, service agreements, cleaning and insurance and subsistence”. The third is “for the purpose of performing parliamentary duties”. In 1984 parliament sat from 12.00 until it finished business, often late into the night when transport home was not available. However Tony Blair changed that. It now seems normal to sit from 11.30am to around 5.00 or 6.00pm. Accordingly it is hard to see how it can any longer be “necessary” for an MP to stay in London overnight for the purpose of performing parliamentary duties.

I live in Brent North, about 12 miles from Westminster, or around 30 minutes by tube. The first train leaves at 5.35am and the last train back leaves Westminster at 00.31. Accordingly I cannot see any possible way that my MP can “necessarily” need to stay in London overnight to perform his parliamentary duties. Like me, most of the residents of Brent North work in London. We have no difficulty in commuting back and forth each day. Yet in 2007/08 my MP claimed overnight expense allowances of £15,079 (roughly 65% of the maximum overnight expenses allowance of £23,083). If you are wondering what your MP got you can find out at

An MP also gets a travel allowance. In 2007/08 mine got £4,501 (£3,952 for regular travel between his home/constituency and Westminster and £549 European travel). A Transport for London annual travelcard between Brent North and Westminster, allowing travel 24/7, currently costs £1,472! (It would have cost a bit less in 2007/08). However the good news (for taxpayers) is that the travel allowance is not tax-free; only the part of it that constitutes a “business journey” is tax-free. The bad news is that it is the House of Commons Fees Office, not HMRC that decides what is the cost of business journeys, and last Friday’s Times noted that “last year the man in charge of checking MP’s expenses declared that he had virtually no ability to scrutinise their claims beyond a “common sense” test”.

An MP of course has duties to perform in two places, his constituency and Westminster. That is different from most people who may occasionally carry out duties in two places but do not regularly do so. But the MP’s situation is not unique. A manager in commerce can be responsible for, say, his company’s factory in Manchester and also have regular duties at the company’s head office in London. He is in an identical position to an MP. So how does his tax position compare with an MP’s?

The tax rules on travel and subsistence were thoroughly overhauled by Gordon Brown in 2003. In other words they are rules imposed on the rest of us (but not themselves) by the will of most of the current MPs. So how do they reflect this “two places of work” problem that applies to MPs? What do they allow the non-MP with two places of work to claim against tax in relation to his overnight stay in Manchester (if he lives in London) or in London (if he lives in Manchester)? The answer is, not a penny; nothing at all. What about the travel from Manchester to London? Again, nothing at all – unless the manager pops into the Manchester factory first, in which case the travel becomes tax deductible. Fair? Or hypocritical for MPs to vote themselves huge tax-free allowances but to deny any tax relief whatsoever to the ordinary man in the street in the same position as an MP? You judge! The justification for the non-MP’s tax treatment is that phrase “necessarily incurred” that I mentioned earlier. Every person who takes the job knows that it carries duties in both London and Manchester. Accordingly the travelling costs are not an expense of carrying out the duties; they are an expense incurred to put the manager in a position to carry out his duties and as such are not tax deductible. Are MPs not expected to realise when they take on their job that it has duties in both places, or do they know full well but choose to give themselves privileges that they deny to others? You decide!

Robert Maas

Monday, May 11, 2009



I want to return to what is becoming a recurrent theme of mine, namely how do Ministers have the nerve to complain that people who pay the tax prescribed by the tax system (rather than the tax that it would have prescribed had Ministers been bothered both to ensure that the legislation reflected their intention and been prepared to allow Parliament sufficient time to consider whether or not it did so) are being unfair when the tax system itself contains so many unfairnesses?

My thoughts have been prompted by reading the judgement of Mr Justice Warren in HMRC v Mobilx Ltd. HMRC suspected Mobilx of either being involved in a tax fraud or, more likely, not investigating their supplier and customer (and its supplier and customer and so on) so as to ensure that they were not an innocent scapegoat caught up in a tax fraud. Mobilx submitted its VAT return for the month to 30 April 2006 showing a VAT repayment due to it of £1.8m. It submitted its return for the month to 31 May 2006 showing a repayment due to it of £3.13m. The repayment never appeared in its bank account. HMRC explained that they were carrying out enquiries and the repayment would “continue to be withheld until our enquiries are complete”.

Obviously most businesses cannot afford to be £5m out of pocket for very long before they go bust! There is a perception that that is what HMRC actually want. “If we can’t prove people are crooks, why not sit on their money until they go bust because it is unlikely that a liquidator will sue us?” OK, that may be a jaundiced view. But, in the context of HMRC telling us time and time again that they want to minimise burdens on business, what other realistic views are there?

Mobilx Ltd did not wish to go bust! Accordingly it asked its accountants to lodge an appeal to the VAT and Duties Tribunal against HMRC’s refusal to repay it the money due. HMRC said, “We haven’t refused to repay you; we have merely refused to decide whether or not to repay you”. The tribunal decided to hear the appeal. Before it could do so HMRC rushed to the High Court and said, or I suspect words to this effect, “It’s ridiculous to think that Parliament believes that taxpayers ought to have some sort of general right to oppose the State. Parliament is very careful to limit the rights of the ordinary citizen. In the case of VAT it has only given the citizen a right to appeal against a decision of HMRC. If we are careful to simply delay indefinitely making a decision there is nothing that the citizen can do about it”.

Sadly, I have no doubt that they are right. Both Magna Carta and the Bill of Rights protect the rights of Parliament, not the rights of the citizen. They were both based on the theory that Parliament represents the citizens. But Parliament today does not really regard itself as representing anyone. Its role seems to be to rubberstamp what the government wants to do. That does not include giving lots of rights to citizens. Citizens’ rights are a nuisance to government and as such clearly need to be curtailed.

So Mobilx Ltd was fighting a hopeless case because it had no right to stop the State (in the guise of HMRC) forcing it into liquidation. But that is not what caught my eye. This was that Warren J complained, when the case came before him, that “Since my decision on this case may be of some significance for HMRC in a number of cases, it is unfortunate from my perspective that Mobilx did not appear to argue that Mr Johnson [i.e. the VAT Tribunal] was correct”.

Mobilx in fact wrote a very polite letter to the court explaining that between the date of the VAT tribunal decision and the date of the court hearing, HMRC had decided not to refund their £5m. They had appealed against this decision. However, being £5m short in their cash flow, they had no money to instruct lawyers to appear before Mr Justice Warren to argue that they had an entitlement to appeal even when HMRC took great care to avoid making a decision, particularly as that was now irrelevant to them as HMRC had at last done so.

Personally, I think it “unfortunate from my perspective” that Mr Justice Warren decided to consider the appeal because the issue was “of some significance to HMRC”, even though he felt that he would have liked to hear arguments from someone other than HMRC. Surely he could have simply said that in the absence of any arguments from Mobilx he would reverse the decision of the VAT tribunal without wishing to set a precedent as he had not been able to consider both sides of the argument? Or he could have said that there was no longer any issue to decide so he could not even consider the case. Or he could have appointed an amicus curie to oppose HMRC.

Personally I think it outrageous that he should have expected Mobilx to spend money on legal representation for a wholly theoretical issue when it was obvious that HMRC’s strategy appeared to be to force Mobilx into liquidation and hope that the liquidator would not think it an appropriate use of whatever funds were available to him to challenge HMRC.

I also think that his decision to decide the case, apparently on the basis that it was “of some significance to HMRC”, when he believed that he was handicapped in doing so because he could hear no opposing arguments, gives the impression that he thinks that a role of the court is to comply with the bidding of HMRC.

In the UK’s (unwritten) constitution the courts are supposed to be independent of the executive (of which HMRC is a part). In judging independence perception is everything. What saddens me most of all is that I think that in this case Mr Justice Warren has seriously undermined the perception that the courts are independent from the State.

Robert Maas

Wednesday, May 06, 2009



What an odd Budget Mr Darling delivered last week. The Times first leader on Saturday commented, “It is considered a golden rule in politics that Budgets that look good on the day, start to look poor by the weekend and vice versa. This week’s Budget has broken the rule. It didn’t look very good on the day. Now it looks worse”.

For the first time ever I fell asleep during the Budget speech and had to download the text from the internet. It was a waste of paper. Anyone who is interested in my thoughts on the actual measures can find them in Blackstone Franks’ Budget booklet (go to My purpose today is to try to fathom out what it was about.

I think that Mr Darling was trying to say, “The country’s finances are in such a mess that there’s not much I can do other than slash government expenditure. I know that’s the right thing to do but we’ve got a general election coming up within the next year and surely no one would expect me to put the interests of the country before those of the Labour party. Cutting expenditure means putting some voters out of work, so although it’s the right thing to do economically it would damage the Labour party, so I’ll just flag it up as an aspiration for a future government and let the mess grow into an even bigger one until after the election. My other big idea is to abandon New Labour – which was Tony Blair’s idea not mine and Gordon’s – and resurrect the old Labour social divisiveness. So, let’s tax the rich! That will bring back old Labour votes”.

Janice Turner, also writing in Saturday’s Times about taxing the rich, told us, “Let the rich, so stung and outraged by this week’s Budget flee [to Hong Kong]”. She explains that tax havens are nasty places to live. For example, “Empty hearted Monte Carlo, with eerie coraly-coloured skyscrapers everywhere blocking out every inch of the lovely bay and the sunlight with it … Or Switzerland … No matter that no one ever had a wild night out in Zurich, that the Swiss – experts say – are cold, xenophobic and insular even to fellow white Europeans … A country that cherishes money more than life itself: the rich and their cash could be very happy there”. Odd. I went to Monte Carlo last year and thought it a beautiful city. I haven’t been to Zurich but I have been to Geneva which I thought pretty, clean and made for walking. All the Swiss that I talked to were very friendly. It’s sad that Janice seems someone to tour the dingy bits of cities that the rest of us manage to miss.

Janice ends her article very old Labour, “If people now revile the rich – and the Times poll yesterday suggests that 57 per cent regard the tax hike as fair – it is because so many have spent a decade being loathsome … How dare the rich complain … They owe it to the country that made them rich, the society they love living in precisely because it is concerned with more than money. Otherwise – to the vaults of Zurich, the chilly units of Hong Kong – let them go”.

On the letters page Mr Watson of Cambridgeshire asks, “What is it that top earners have done for this country that is so marvellous? … If they all emigrated, maybe we would be left with a sensible and pragmatic bunch”.

Well Mr Watson, bearing in mind that Mr Darling’s definition of rich is anyone earning more than £150,000, which the Times told me a few weeks back includes headmasters of major comprehensive schools, the answer to your question is clearly, “A great deal”. Headmasters can readily find jobs in the USA. So can “rich” hospital consultants. That would cause huge problems for the NHS. The “rich” run our major companies which provide employment for many of us. “Rich” inventors create new businesses and products that make our life easier. The “rich” Premier League footballers provide entertainment for about half a million of us every week – and on the basis of the huge sums that Sky Sports was prepared to pay for the TV rights, I suspect many millions more at home. The citizenry seem happy to pay to watch “rich” singers and other entertainers. The UK would be pretty boring if we drive them all overseas.

Writing in the Guardian Anne Redston, a leading tax professional, describes the Budget as “radical” because it brings a new approach to tax avoidance and evasion. I’m not clear what she means. Although the Budget contains a lot of anti-avoidance provisions, most of these seem to be correcting badly drawn provisions in earlier years. Many of us think that the new approach to tax evasion – publicly naming and shaming the culprits – could prove counterproductive and deter people from “coming clean”. There’s not much radical about that!

Robert Maas